Under Armour Case, Team 2 Final Presentation


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I competed in a 2 day Deloitte Information Technology Consulting Case Competition, open to all IT students at Notre Dame. Working with a team of 3, we put together this deck of slides in less than 48 hours.

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Under Armour Case, Team 2 Final Presentation

  1. 1. Under Armour, Inc. - Strategic Growth in a Competitive Market<br />Building a Case for Change<br />Team 2: <br />Brendan Crowley,<br />Belen Molina,<br />Guru Velasco<br />Friday April 17th, 2009<br />
  2. 2. Contents<br />
  3. 3. The Case for Change<br />
  4. 4. Under Armour is currently laden with numerous operational inefficiencies, and needs to revamp their strategy for growth.<br />Under Armour stock is viewed as Overvalued<br />There is no system in place for meaningful customer analysis.<br />Different divisions store data in different ways<br />Marketing efforts are not as strong<br />Supply Chain Management predictions are more difficult<br />Management feels overburdened. <br />Insufficient communication between different branches<br />This results in major operational inefficiencies<br />Managers feel unable to implement changes<br />The Case for Change<br />The Case for Change<br />The restructuring of Under Armour’s IT system will increase operational efficiency and allow more meaningful customer analysis. <br /><ul><li>This will provide the foundation for strategic growth success both internally and externally
  5. 5. Internal operational inefficiencies will be reduced by useful collection, analysis and transference of data
  6. 6. Revitalized marketing efforts and further international expansion will be founded upon new business intelligence</li></ul>Primary Goals : Obtaining Meaningful Customer Analysis and Reducing Operational Inefficiency.<br />
  7. 7. “Cotton is the Enemy”<br />We strongly believe that Under Armour should continue to grow by capturing a larger share of the athletic apparel market through International Expansion. In addition, the restructuring of Under Armour’s IT system will increase operational efficiency and allow more meaningful customer analysis. This will provide the foundation for success without having to include additional product lines within the U.S.<br />Declining consumer confidence in the U.S. has impacted domestic sales<br />However, growth in the global market has continued<br />In 2011, the global apparel, accessories, & luxury goods market is forecast to have a value of $1,405.8 Billion, an increase of 24.7% since 2006<br />The Case for Change<br />We are convinced that Under Armour should continue to grow by capturing a greater share in athletic apparel as opposed to penetrating the overall apparel market with non-athletic products aimed at replacing cotton. <br /><ul><li>People associate Under Armour with athletic apparel
  8. 8. UA’s core competency is its form-fitting, moisture wicking performance apparel designed to be worn under sportswear
  9. 9. Penetrating the overall apparel market would signify reaching out to a different market sector and changing the image the company has worked so hard to convey
  10. 10. The image Under Armour has built around its products is one of invulnerability, athletic performance, and </li></ul>Source: http://en.wikipedia.org/wiki/Under_Armour<br />NYTimes.com- “Muscling Into the Mainstream”<br />
  11. 11. Recommendations & Cost-Benefit Analysis<br />
  12. 12. Revamped IT System and Business Intelligence<br />United States Market<br />International Market<br />Revitalized Marketing Effort<br />Recommendations & Cost-Benefit Analysis<br />Overarching Recommendations<br />The restructuring of Under Armour’s IT system will increase operational efficiency and allow more meaningful customer analysis. This will be the foundation for all the changes to be made at Under Armour.<br />Restructured system will utilize all collected data to create useful business intelligence<br />Operation inefficiencies will be reduced by more efficient information systems<br />Changes will be easier to implement and Managers will be less overburdened<br />The ability to analyze and manipulate data from all branches of Under Armour will provide the basis for more effective marketing campaigns both within the US as well as internationally<br /><ul><li>Restructured system will utilize all collected data to create useful business intelligence
  13. 13. Operation inefficiencies will be reduced by more efficient information systems
  14. 14. Changes will be easier to implement and Managers will be less overburdened</li></ul>Currently the 4000 international stores out of a total 12000 stores Under Armour is sold in provide only 4% of total revenue. Given the state of the economy at home, additional international revenue is critical<br /><ul><li>Potential acquisition of weaker international company offering similar goods
  15. 15. Work through this company to gain market share
  16. 16. Initial penetration of Swedish market, then the rest of the Nordic region</li></ul>We strongly believe that Under Armour should continue to grow by capturing a larger share of the athletic apparel market. This will be achieved through the following goals:<br /><ul><li>Revitalized US Marketing Campaigns
  17. 17. Utilize business intelligence to better sculpt effective marketing campaigns for both genders
  18. 18. Push for increased Web Sales
  19. 19. Web Sales are providing a larger amount of total sales every year in the online apparel industry</li></li></ul><li>Costs<br />Benefits<br />Recommendations & Cost-Benefit Analysis<br />Cost-Benefit Analysis<br />Time spent creating a transformation process for the Marketing & Service departments to Oracle format<br />Training costs<br />Cost of newer Oracle-related hardware and software for central data warehouse<br />Cost of Software as a Service to back-up all data<br />Potential tension between departments concerning data use<br />Cost of Business Intelligence Software<br /><ul><li>Useful data and business intelligence generated by the new system will contribute to successful marketing and strategic growth
  20. 20. Both in the United States and Internationally
  21. 21. Immediate increase in productivity when data is consolidated in data warehouse on a server that can be accessed by all departments
  22. 22. Managers can pull “read-only” data to use for their purposes
  23. 23. No modification of data outside your own department to ensure data integrity
  24. 24. Increase in operational efficiency between departments saves costs and time
  25. 25. Upper managers can pull data from all areas and use it to guide lower managers without having to waste each other’s time
  26. 26. Both Upper and Lower managers can better handle their responsibilities when information is readily available to assist in decision making</li></li></ul><li>Project Plan & Timeline<br />
  27. 27. Project Plan & Timeline<br />Basic Project Plan & Timeline<br />Research<br />Preparation<br />Implementation<br />Maintenance<br />
  28. 28. Operational & Organizational Assessment: <br />
  29. 29. Capabilities<br />Risks<br />Operational & Organizational Assessment<br />Operational Recommendations & Risks<br />The current IT system needs to be restructured to increase operational efficiency and allow more meaningful customer analysis<br />Improved data analysis will allow better forecasting which helps control the supply chain management and inventory  saving costs<br />Software as a Service can lighten the hardware costs of Under Armour by taking care of back-ups, and potentially even the storage of data<br />The new system should fit Under Armour well as it will bridge the gap between different departments and allow easy access to critical data across the company<br />Marketing efforts are strong within the United States but still need to be revitalized. International efforts need to seek out popular professional sports contracts to promote the brand<br />Expansion of international sales is critical to balance predicted slow domestic industry growth<br /><ul><li>With all the data in the same place, a manager might not know the specific query needed to obtain the information he or she needs
  30. 30. Most managers in accounting wont want anyone in marketing “touching their stuff” – i.e. data integrity is critical
  31. 31. If international expansion is slow, it can raise costs
  32. 32. Market is highly competitive in both the national and international arenas</li></li></ul><li>Marketing<br />Two Recent Analyst Reports<br />Operational & Organizational Assessment<br />Source:http://blog.oregonlive.com/playbooksandprofits/2008/04/pp_blog_suspects_some_sportswe.html<br />
  33. 33. Marketing<br />Sweden<br />U.S. Strategy<br />US & Sweden <br />Operational & Organizational Assessment<br />At home, Under Armour should continue to implement their already successful marketing campaign:<br />Continue to promote their recently launched cross trainer shoe and cleats <br />Continue to arduously pursue its goal of capturing a greater market share in athletic apparel <br />Television ads<br />Important Sporting Events advertising<br />Super Bowl <br />Fulfill goal of opening 25 factory stores at the end of the year<br />Continue to offer “a fantasy of invulnerability” through marketing (cultural critic Susan Faludy)<br />Increase efforts to capture market share in West Coast<br />Continue marketing efforts aimed at the Armed Forces<br />Line of tactical wear for military personnel <br />By implementing a new IT system we will be able to organize, capture, and implement more and better data into our marketing strategy:<br /><ul><li>Data will be easier to analyze
  34. 34. Information will be accessible
  35. 35. Take advantage of features such as website personalization and customization
  36. 36. Build an enormous database of product and customer information that supports functions such as customer service and Web site serving
  37. 37. Trends show that online apparel sales are increasing
  38. 38. Electronic commerce increased 15% in Sweden in 2008
  39. 39. In addition, UA could create a dedicated site to Sweden and in the future, the rest of the Nordic countries
  40. 40. Take our experience supporting the Fulham team in England and apply it in Sweden:
  41. 41. Sponsor a popular local soccer team
  42. 42. Swedish soccer teams lack the international recognition that European teams have
  43. 43. This implies a lower sponsorship cost
  44. 44. Since soccer is the number one sport in Sweden, the risk associated is low
  45. 45. Picking the right distribution channel can be of great importance when entering the Swedish market
  46. 46. Penetration Pricing strategy
  47. 47. The most effective advertising is done in magazines and mailing catalogues
  48. 48. Television commercials are not the major advertising channels
  49. 49. Take advantage of sporting events such as local soccer games to use television ads as advertising medium</li></ul>Source: http://www.infomat.com/research/infre0000238.html<br />http://www.emarketservices.com/start/News/International/news/Electronic-commerce-increases-15--in-Sweden-in-2008.html?xz=0&sd=1&ci=2157<br />
  50. 50. Why Nordic Region?<br />Sweden<br />Operational & Organizational Assessment<br />International Expansion: Sweden<br />Our initial focus should be Sweden, and in the future, the rest of the Nordic Region (Norway, Denmark, and Finland) .<br />Norway, Denmark, Finland, and Sweden together form one of the world&apos;s most desirable markets<br />Their 24 million people are among the world&apos;s wealthiest. together they form among the top 5 largest markets in Europe.<br />These wealthy people have money to spend <br />Incomes are distributed more evenly than in the U.S., making every person a consumer<br /><ul><li>Personal consumption is increasing, and this especially benefits the clothing market
  51. 51. The 7 largest sporting goods stores sold $375 million of sports apparel in 1996
  52. 52. Swedes spend an average of $650 per capita on clothes
  53. 53. The market is most receptive to Sports and Casual Wear made in the US
  54. 54. Most of the market is controlled by 50 of the largest apparel companies.
  55. 55. This is where we want to sell our UA athletic apparel
  56. 56. The top two best sales prospects in Sweden are:</li></ul>High quality sports jackets and pants and sport shirts<br /><ul><li>Knitwear, including polo/turtle necks, sports shirts
  57. 57. The Swedish market has few regulations and no trade barriers since it joined the EU in 1995
  58. 58. Note:
  59. 59. Most people in Sweden exercise regularly
  60. 60. According to the United States of American Department of Commerce, “Sports and Leisure Products” are listed in the top 15 industry sectors that will provide the best opportunities for US exports to Sweden</li></ul>Source:http://www.infomat.com/research/infre0000238.html<br />
  61. 61. Financial Assessment<br />
  62. 62. UA Balance Sheet (Assets)<br /> Financial Assessment<br />Source: UA-Thomson Annual Financials, 2007.<br />
  63. 63. UA Balance Sheet (Liabilities & Shareholder’s Equity)<br /> Financial Assessment<br />Source: UA-Thomson Annual Financials, 2007.<br />
  64. 64. UA Income Statement<br /> Financial Assessment<br />Source: UA-Thomson Annual Financials, 2007.<br />
  65. 65. Financials<br />Financial Ratios<br />Interpretation<br />Financial Assessment<br />The previously mentioned financial ratios show that Under Armour is in a good financial position to invest in New IT and pursue International Expansion. Currently:<br /><ul><li>Not highly financed through debt
  66. 66. Company is able to pay short-term liabilities as determined by their positive working capital
  67. 67. Highly efficient production processes
  68. 68. Highly profitable company
  69. 69. Efficient use of assets by management to generate earnings as shown by ROA</li></li></ul><li>Technology Assessment<br />
  70. 70. Current Data Storage<br />Technology Assessment<br />UA Departmental Systems<br />Accounting<br />Marketing<br />Service<br />Operations<br />Marketing<br />UA Store,<br />Public<br />Web<br />Product<br />Distribution<br />Consumer<br />Care<br />Consumer<br />Relations<br />Retail<br />Service<br />Contracts<br />UA Touch Points<br />Consumer Interactions<br />Direct and Retail<br />Consumer<br />
  71. 71. Technology Case for Change<br />System Structure<br />Marketing Strategy<br />Data Availability<br />Disperse Data<br />Technology Assessment<br />The way UA departments evolved, they developed independent systems.<br />Each department has own system<br />Inefficient communication or not at all<br />Even when holding valuable information, systems do not communicate<br />Regardless of the recommendation, UA will refocus on its marketing strategy. The current independent systems does not provide adequate support for decision making, it’s inconsistent surveys are usually done quarterly and thereby insufficient.<br /><ul><li>New efforts need more than a quarterly survey
  72. 72. Increase efforts to reduce latency and data quality for strategic decision making</li></ul>While analyzing data requirements for the marketing strategy, we discovered that available data is either insufficient or not easily accessible.<br /><ul><li>Data acquisition is done through departmental request and not through system communication
  73. 73. Data recollection efforts provide insufficient data</li></ul>Departments lack a structure of integrating data. Resources are wasted due to inefficient methods to look at the dispersed data, causing a competitive disadvantage. <br /><ul><li>Even when data is stored in a department, there is difficulty in communicating it due to the system independence</li></li></ul><li>Goals<br />Minimize Disturbance<br />Empowerment<br />Application Isolation<br />Technology Assessment<br />The changes in the system and storage strategies have as a purpose to empower management in general, but the marketing department specifically. The changes are geared to provide enough information for:<br />Quick demand response<br />Strategic time sensitive business decisions<br />The changes done on the system will always try to isolate the applications’ internal data structure. The purpose for this strategy is to avoid making changes in other dependant department applications when changes have to be made.<br />The changes done in the system have as a primary goal to avoid making changes to the existing systems. Changes in production systems translate into risks that the company is making. With this goal in mind, the data systems will be left to run as they do currently and a strategy of an overall data integration will be adopted with strategic business applications.<br />
  74. 74. Recommendation- Service Department Data Integration<br />Data Integration<br />Technology Assessment<br />Relying on personal spreadsheets to track service is inefficient but manageable.<br /><ul><li>Sharing a database
  75. 75. Addition of a database
  76. 76. ELT process can extract the information from all the spreadsheets and update a database, and that data would be then extracted and transformed to be loaded into the data warehouse
  77. 77. Use of Triggers
  78. 78. Behind the scenes processes in charge of data update into the data warehouse
  79. 79. Events in the spreadsheet ranging from specific activity to time elapsing can trigger events that continuously update changes in the spreadsheet directly to data warehouse.
  80. 80. Other data integration software</li></ul>Source: http://msdn.microsoft.com/en-us/library/ms978572.aspx<br />
  81. 81. Recommendation- Integration of Data Warehousing<br />Nonvolatile<br />Schema Design<br />Subject Oriented<br />Integrated<br />Time Variant<br />Data Modification<br />Technology Assessment<br />Design purpose of data warehouse is the analysis of data.<br />Ability to define a data warehouse by subject matter<br />Data warehouse must have the information in common format.<br /><ul><li>Disparate source information put into a consistent format</li></ul>Purpose of data warehouse is data analysis and post-decision monitoring.<br /><ul><li>Data rarely changes after saved in the warehouse</li></ul>Data warehouse shall be updated in a daily basis using extract, transform and load (ETL) process.<br /><ul><li>No direct modification by end users</li></ul>Use of de-normalized or at least partly de-normalized schema that allow the relational tables to be arranged in such a way to improve query performance.<br /><ul><li>Online analytical processing
  82. 82. Allow multi-dimensional analytical queries
  83. 83. Rapid execution time</li></ul>Time variant refers to the data warehouse focus on analyzing change over time.<br />Source: http://www.mcs.csueastbay.edu/support/oracle/doc/10.2/server.102/b14223/concept.htm<br />
  84. 84. Recommendation- Use of Business Intelligence<br />Business Intelligence<br />Technology Assessment<br />Adoption of business intelligence techniques, with required software and hardware to expand data collection and analysis.<br /><ul><li>Data Mining
  85. 85. Finds trends and patterns hidden in data
  86. 86. Feature to automate business intelligence discovery and distribution
  87. 87. Enterprise ready
  88. 88. Performance Management
  89. 89. Establishment of metrics to use current data and measure current performance
  90. 90. Enterprise Reporting
  91. 91. All levels of enterprise have access to data
  92. 92. “Single source of truth”
  93. 93. RISK: Granting full access to all departments can cause tension</li></ul>Source: http://www.avanco.com/_assets/img/gfx-bi_diagram.gif<br />
  94. 94. New Storage Structure<br />Technology Assessment<br />Source<br />Data Warehouse<br />Data Marts <br />Business Users<br />
  95. 95. Conclusion<br />
  96. 96. Goals<br />Conclusion<br />Conclusion<br />Reduce Operational Inefficiency<br />Data Integration & Data Sharing<br />Boost Marketing Efforts domestically and internationally<br />Provide competent information to make strategic decisions concerning growth and expansion<br />Ensure that international expansion is targeted where populations has large purchasing power<br />Increase profit by:<br />Decreasing costs <br />Increasing sales <br />Increasing market share in athletic apparel<br />
  97. 97. Appendix<br />
  98. 98. Sources<br />Appendix<br />Appendix<br />http://en.wikipedia.org/wiki/Extract,_transform,_load<br />http://www.mcs.csueastbay.edu/support/oracle/doc/10.2/server.102/b14223/concept.htm#i1006237<br />http://www.avanco.com/sol_business_intel.html<br />http://www.oracle.com/solutions/business_intelligence/data-mining.html<br />http://www.oracle.com/solutions/business_intelligence/olap.html<br />http://msdn.microsoft.com/en-us/library/ms978572.aspx<br />http://www.dwinfocenter.org/defined.html<br />http://en.wikipedia.org/wiki/Under_Armour<br />NYTimes.com- “Muscling Into the Mainstream”<br />http://blog.oregonlive.com/playbooksandprofits/2008/04/pp_blog_suspects_some_sportswe.html<br />http://www.infomat.com/research/infre0000238.htmlhttp://www.emarketservices.com/start/News/International/news/Electronic-commerce-increases-15--in-Sweden-in-2008.html?xz=0&sd=1&ci=2157<br />